Scenario: A firm wants to set up a factory. It has four different options. The rent of the factory in each of the four different locations and the time taken to transport the product from each location to the market is shown in the table below. The opportunity cost of time is $10 per hour.

-Refer to the scenario above.If the firm chooses factory Far over Close,what is its marginal opportunity cost of transporting products to the market?
A) $100
B) −$200
C) $50
D) $150

Question

Scenario: A firm wants to set up a factory. It has four different options. The rent of the factory in each of the four different locations and the time taken to transport the product from each location to the market is shown in the table below. The opportunity cost of time is $10 per hour.
 
-Refer to the scenario above.If the firm chooses factory Far over Close,what is its marginal opportunity cost of transporting products to the market?
A) $100 
B) −$200 
C) $50 
D) $150

Quizplus · Accepted Answer

The marginal opportunity cost of choosing factory Far over Close is the additional cost incurred, which is $100.

Scenario: a Firm Wants to Set Up a Factory